New bloc offers golden opportunity

By Eric Chiou 邱奕宏

Although the articles of the RCEP are still unavailable, relevant documents have revealed some of its unique features. For example, the RCEP stresses the principle of open accession, allowing ASEAN FTA partners or other economic partners to join the RCEP whenever they feel comfortable to do so.

Next, it underlines RCEP’s flexible process, which can be conducted via a sequence, single undertaking or other approaches approved by members.

Additionally, the RCEP also distinguishes itself from the TPP by highlighting special and differential treatment as well as economic and technical cooperation, both of which principles represent ASEAN’s special consideration to lesser developed members, such as Vietnam, Cambodia, Laos and Myanmar.

In other words, the RCEP maintains ASEAN’s long-term principle of solidarity when conducting external FTA negotiations in order to avoid leaving any ASEAN member behind.

Some progress has been made on the preliminary discussions this year, but formal RCEP negotiations are expected to start early next year in order to wrap up the negotiations by 2015, just before the full realization of the ASEAN Economic Community.

While the emergence of the RCEP suggests the final convergence over the two blueprints of East Asian regionalism between China’s support of ASEAN Plus Three FTAs and Japan’s proposal for ASEAN Plus Six FTAs, as far as Taiwan is concerned, the RCEP, due to its open accession principle, may open a window of opportunity for Taiwan’s participation in Asian economic integration.

Since Taiwan has merely concluded five effective FTAs and only its trade pact with China has economic relevance, it is imperative for Taiwan to take part in regional economic integration to avoid being further marginalized. Although the Taiwan government had made a public appeal to join the TPP last year, seeking membership in both the TPP and RCEP is certainly not contradictory.

Given that Taiwan’s economic survival hinges on its export-oriented growth and that Taiwan’s trade and investment relationships with RCEP members have comprised a significant portion of its external economic activities, it is equally important and indispensable for Taiwan to participate in the ASEAN-led economic integration.

Furthermore, seeking RCEP membership is likely to contribute to Taiwan’s economy in various ways.

First, according to various quantitative analyses, Taiwan’s participation in the RCEP will generate more economic benefits than its membership in the TPP.

Second, joining the RCEP will facilitate Taiwanese firms’ further integration into East Asian production chains and help Taiwanese firms to expand in overseas markets.

Third, given its emphasis on flexibility and that it takes each member’s needs into account, the RCEP is likely to allow more time for industrial adjustment and therefore to pose less negative impact on adversely affected industries.

Finally, compared with the TPP, the RCEP includes major emerging and future markets, such as China, India and Indonesia, which are likely to be the locomotives of future global economic growth. Taiwan’s active involvement in the RCEP will not only pave the way for its access to these future markets, but it will also provide a crucial opportunity for Taiwan to break its quandary of regional economic isolation.